Britain's Barclays Bank has reached a deal with China and Singapore making the two governments major shareholders in preparation for the British bank's attempted takeover of Dutch banking giant ABN Amro, it was reported Monday.
Barclays, which is fighting against a Royal Bank of Scotland-led consortium to take over ABN Amro, will be using the funding to lift its offer to £45.4 billion ($90.8 billion). The deal will see the China Development Bank (CBD) take a 3.1% stake in Barclays, with Singapore investment fund Temasek taking 2.1%, in a £2.5 billion investment. If Barclays' bid for ABN succeeds, the duo will buy further shares worth up to £6.6 billion in the combined business, the BBC reported.
In addition Barclays has promised CBD extensive support in its modernization process. The two banks signed Monday a cooperation agreement, China's official Xinhua news agency reported. Barclays will help the Chinese bank develop its management structure through technology transfer and training. The CBD is subordinate to China's Council of State. It supports in particular infrastructure projects and is headed by a former central bank vice-chairman. The Singapore partner, Temasek said the investment ties in well with its interest in investing long-term in strong financial groups. “We are pleased to have this opportunity to invest in Barclays,” said Frank Tang, senior managing director of Temasek. “We look forward to supporting them in their strategy to create opportunities for a higher level of sustainable growth.” “We believe the Barclays' board and management understand what it takes to make the Barclays-ABN Amro merger work and deliver value,” said Simon Israel, Temasek executive director.
Barclays had previously agreed to a £45 billion ($90 billion) offer with the ABN board, although its Royal Bank of Scotland-led rival tabled a formal 48.2 billion bid last Friday. Commentators said the deal underlined the determination of China and Singapore to use their considerable financial muscle to acquire strategic stakes in Western banking and business, while Barclays hoped that “Asian financial firepower” would help it win the battle for ABN Amro. (monstersandcritics.com)